What would veteran lawmakers do about Texas’ budget deficit?

AUSTIN — State GOP leaders say drastic cuts are the only way out of Texas’ unprecedented budget hole. And, they say, cries of Armageddon from dissenters are overly dramatic.

But veterans who have been through the state budget trenches say that each decrease is a hill sure to be fought over and that the end of the session provides no assured victory.

Four former high-ranking state officials, two Republicans and two Democrats, say this year’s fiscal mess is so severe that many treasured services and institutions will suffer.

House Republican leaders last week introduced a bare-bones, two-year budget that would whack $31.1 billion from spending of state and federal money — a 17 percent cut.

Experts estimate such cuts could shrink school district payrolls by 80,000 to 100,000 jobs and lop off 60,000 college students from financial aid.

To add historical perspective, The Dallas Morning News interviewed former officials who have been through budget battles: former Lt. Govs. Bill Hobby and Bill Ratliff, former Secretary of State George Bayoud and longtime House education and revenue policy writer Paul Sadler.

They had a lot to say. They agree that a tax increase is unlikely, although they vary on how wise it is to rule that out. They agree that this gap is bigger than any they saw in four decades of service to the state.

And, they agree that leaders face many sleepless nights before Sept. 1, when some kind of budget must be passed — even as a stopgap. Otherwise, state agencies will shut down.

Big unknowns make predictions hard, they say: Will the House’s new GOP supermajority defer to tea party adherents who insist on a cuts-only approach?

Other questions: How will the political ambitions of Gov. Rick Perry and Lt. Gov. David Dewhurst play into the mix? How loudly will Texans scream about proposed cuts?

Here were their takes:

Bill Hobby

Major funding cuts to schools come with racial implications

His background: The Democrat, from Houston, was the state’s longest-serving lieutenant governor, 1973-91.

His overall take: Big cuts to schools will hurt Hispanic students.

What he said: Hobby said keeping a no-new-taxes pledge in light of state needs “would be catastrophic,” especially to public and higher education — 61 percent of state spending.

“Obviously, there will be major cuts in education. We’ve already seen how this school district will cut 200 teachers and that school district’s going to cut 400, which they’ll have to do. So let’s look at unpleasant facts here: That’s racial.

“A huge majority of public school students in Texas are … black and brown. As an example, in the 10 years between 1998 and 2008, total enrollment in Texas schools grew by 795,000, and of that … 748,000 were Hispanic. And I think Republicans don’t like public education because they’re educating black children and brown children. That’s the inevitable conclusion.”

Hobby said he doubts leaders will raise taxes, but they might tap the $9.4 billion rainy day fund, increase fees and pass costs down to school districts and cities.

“It pushes [costs] down to the school districts. … They will do all those things, there’s no doubt about that; but for people who talk about fiscal responsibility, as we know from the record, they’re the most irresponsible people.

“I assume they’ll use the rainy day fund. I can’t conceive of not using it. That would be insanity. …

“But by any measure you want to use, Texas will go down in rankings. And we’re already in the low 40s on virtually every ranking you can think of.”

Will big cuts be politically risky?

“It’s completely irresponsible,” said Hobby. “Hell, it may make them more popular.”

George Bayoud

No need to panic just yet; wait and see how bad it really is

His background: Bayoud, of Dallas, was secretary of state (1989-91) and executive assistant to Gov. Bill Clements. He is a Republican.

His take: “It’s premature to say the sky is falling.”

What he says: In 1987, under Clements, the state faced a $6.5 billion shortfall. Clements, who had pledged no new taxes, forced a standoff until the government almost shut down. Eventually, he relented and signed a tax bill. Bayoud said Republican majorities in both houses will create a different dynamic than Clements faced 24 years ago.

“The public out there wants you to live within your means,” Bayoud said. “I do not believe there will be a tax increase at all. I think that would be the wrong message. I do think they’ll have an opportunity to look at other potential revenue sources, including the rainy day fund. But I’m a real big believer that now’s not the time. …

“Right now it’s premature to say that the sky is falling. You just have to let things play out in the next few months.”

Bayoud said that when House and Senate budget negotiators meet in May, the priorities will become clearer, the public, schools, health care providers and other constituencies will have made their cases, and the process will smooth out some of the greater pitfalls.

“You have to go through this process. It’s not going to be pleasant. It’s going to be tough.

“When they figure out where they are and what their needs are — whether they need to go into the rainy day fund, all those type of things — that will happen.”

How tough are these decisions politically?

“It’s part of being a member. … I’m sure they’ll be hearing a lot from a lot of different folks. We’ll hear a lot of howling. Let this process begin. It’s too premature to say where we’re going to be.”

Bill Ratliff

Schoolchildren will be the

ones who will suffer the most

His background: Ratliff, of Mount Pleasant, was lieutenant governor (2000-03), served in the Senate (1989-2003) and was past chairman of the education and finance committees. He is a Republican.

His overall take: School classes will be bigger, course offerings fewer.

What he said: While in the Senate, Ratliff drew fire for supporting a “Robin Hood” school finance plan that transferred funds from richer to poorer school districts. A retired civil engineer, he advises and lobbies for a public school advocacy group.

“There are less than 5 million schoolchildren. And you’re talking about $5 billion a year that the school districts would have to do without. That’s $1,000 per student.

“The system may not be as efficient as some people think it ought to be, but $1,000 per student is a huge hit,” or 12 percent of districts’ total revenues.

“We’re talking about major increases in class size, major layoffs of the teacher corps. Draconian is a mild word for that, [but] it’s going to take a while for the mamas to find out that their child’s classroom … teacher … and … course offerings are going to be impacted.

“If that filed version from Rep. [Jim] Pitts doesn’t do anything, it illustrates how bloody awful the cuts are going to have to be if there’s no more revenue.”

Ratliff predicted lawmakers will be forced to tap much of the rainy day fund, but he warned that his party’s conservative wing may block any revenue raisers.

“Members could look at the business tax, and look at the exemptions and look at the loopholes … and raise considerably more revenue without it being classified as a new tax. It would simply be fixing the oversights from the first time it was passed. But I’m sure there would be a huge hue and cry even at that.”

Ratliff said there’s another big unknown: Dewhurst could decide to run for U.S. Senate next year.

“Does he want to run on cutting $5 billion a year out of the public school system?”

Paul Sadler

The public can’t be left out

of the painful budget process

His background: Sadler, a Democrat from Henderson, served in the House from 1991 to 2003. He was chairman of the Public Education Committee from 1995 to 2003.

His overall take: The public should be heard in setting priorities.

What he said: In his freshman session, the state faced a $4.6 billion shortfall. The House had 36 freshmen, only one fewer than today. Sadler said freshmen in both parties resisted raising taxes, prompting a meeting with then-Lt. Gov. Bob Bullock and then-Gov. Ann Richards.

“Gov. Bullock and Gov. Richards came in to meet with us. I remember then-Rep. John Carona saying, ‘Why don’t we prioritize this budget more?’ ... Gov. Richards’ response was, ‘We have prioritized, and the truth is, we have to do all of this.’ But we worried about it. … It was a nickel gasoline tax, which is the last time the gasoline tax has been raised.”

Last year, state candidates were vague about the budget problem, Sadler said. The House’s budget, though, is like a bucket of cold water in the face, he said.

“Always before now, it’s been here’s this big number of a deficit. But it wasn’t real to anyone. When all of a sudden it’s your junior college that you lose, or your local school district that loses money, it becomes real. It becomes personal. So it’s an instructive process but it’s not the final process.”

Sadler, now a wind-farm lobbyist, said the public has a role.

“The more they make known to their members of the Legislature what’s important to them, that budget will ultimately reflect what’s important. If as a public we sit at home and keep our mouth shut, then we’re going to get something different.”

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